U.S. Ethanol Exports Setting a New Record in 2018
S. Patricia Batres-Marquez
Decision Innovation Solutions
11107 Aurora Avenue Urbandale, IA 50322
The most recent data published by USDA-FAS on December 6, 2018, indicates ethanol exports from January to October 2018 reached a volume of 1.417 billion gallons, up 29 percent (318 million gallons) from the same time last year (1.099 billion gallons), and already up 3 percent from total exports in 2017 (1.378 billion gallons) (Figure 1).
Figure 1. U.S. Ethanol Exports by Selected Destination
The negative impact on U.S. ethanol exports to Brazil due to Brazil’s 159 million gallon (600 million liter) annual ethanol import tariff rate quota (TRQ), or 20 percent out-of-quota tariff, has been partially offset by consistently high gasoline prices. From January to October 2018, Brazil has been the main destination for U.S. ethanol exports, with shipments reaching 425 million gallons. Exports to Brazil were up 19 percent year-over-year and made up 30 percent of total shipments during the first 10 months of 2018. Brazil’s ethanol blending rate remains at 27 percent (E27). According to the USDA-FAS report, high gasoline prices, as well as a sustained surplus of sugar in the world market in the 2018/19 marketing year, are boosting Brazil’s sugar-ethanol production this year, which is projected up 9 percent to 30.755 billion liters (8.12 billion gallons) from 2017. In addition, Brazil is expected to import 2.0 billion liters (528 million gallons) of ethanol in 2018. Brazil’s ethanol imports are mainly for fuel use and are almost entirely sourced from the United States. Given the pace of U.S. ethanol shipments so far, and the expected volume of Brazil’s ethanol imports, 2018 could be a record year for U.S. ethanol exports to that country. The TRQ will be reevaluated two years after its implementation (September 1, 2019).
Canada is the most reliable market for U.S. ethanol. Over the past six years (2012-2017), the U.S. exported 322 million gallons of ethanol to Canada, on average (see Figure 1). U.S. ethanol shipments to Canada during the first 10 months of 2018 were up 5 percent to 293 million gallons compared with the same period in 2017 (279 million gallons). Canada continued as the second largest market for U.S. ethanol, with a share of 21 percent of total U.S. ethanol shipments during January to October 2018.
From January to October 2018, U.S. ethanol exports to India reached a volume of 119 million gallons. Shipments to India represented 8 percent of total U.S. ethanol shipments during that period. At this pace, India is expected to continue as the third largest market for U.S. ethanol this year; however, exports during the first 10 months of 2018 were down 21 percent from last year. In the long-run, India’s market could have large potential for U.S. ethanol exports, given India’s proposed ethanol blending of 20 percent (E20) by 2030, but for now, the projected 2018 blending is only about 3.2 percent.
In addition, other top markets this year (January to October) have been the European Union (97 million gallons, 7 percent), South Korea (69 million gallons, 5 percent), the Philippines (62 million gallons, 4 percent), Peru (47 million gallons, 3 percent), and Mexico (23 million gallons, 2 percent). The United States also exported 179 million gallons of ethanol to “Other Markets” from January to October 2018 (Figure 1). Within these markets, six received 111 million gallons: Oman (29.4 million gallons), Malaysia (29.3 million gallons), Singapore (18.8 million gallons), Nigeria (18 million gallons), and Saudi Arabia (15.6 million gallons). With competitive U.S. ethanol prices, U.S. ethanol shipments to Other Markets increased 13 percent compared to last year.
U.S. ethanol exports to China from January to October 2018 were estimated at 53 million gallons, which resulted from two shipments, one in February (33.1 million gallon) and another in March (19.8 million gallons). The combined tariffs of 30 percent imposed by China in January 2018 plus the retaliatory tariff of 45 percent in April 2018 undermined U.S. ethanol exports to China this year.
Figure 2 shows U.S. ethanol exports by type. From January to October 2018, the U.S. exported 643 million gallons of denatured ethanol for fuel. Shipments increased 74 percent from the same period last year. Canada was the largest importer of this kind of fuel, with a share of 41 percent (266 million gallons) of total sales.
U.S. exports of undenatured ethanol for fuel from January to October 2018, were up 2 percent to 694 million gallons compared with January to October 2017 sales. Brazil was the main destination for U.S. undenatured ethanol for fuel with 402 billion gallons, equivalent to 58 percent of total shipments of this type of fuel during the first 10 months of 2018.
U.S. exports of denatured ethanol for non-fuel, non-beverage purposes during the first 10 months of this year increased 51 percent to 52 million gallons relative to the same time in 2017. Canada was the lead market for U.S. denatured ethanol for non-fuel, non-beverage purposes, with 25.6 million gallons and 49 percent of total sales. In addition, U.S. shipments of undenatured ethanol for non-fuel, non-beverage purposes were up 127 percent to 28 million gallons from sales during January to October 2017. The leading market for this kind of fuel was Saudi Arabia with 47 percent (13 million gallons) of the market. As indicated, the United States exported a total of 1.417 billion gallons of ethanol during the first 10 months of 2018, which were generated by the combined exports of these four types of fuels.
Figure 2. U.S. Ethanol Exports by Type
Despite trade barriers such as tariff rate quotas imposed by Brazil and regular and retaliatory tariffs imposed by China, U.S. ethanol exports have thrived this year. As of October 2018, U.S. ethanol exports already surpassed record high exports last year. Competitive U.S. ethanol prices have boosted sales in many markets this year. U.S. ethanol exports to China will be hampered for as long as tariffs imposed by that country persist and are as high as these are currently.
Batres-Marquez, S. Patricia. 2018. “U.S. Ethanol Exports Setting a New Record in 2018." Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. December.